OSL will not pay maximum returns

SHAREHOLDERS of Oil Search Ltd (OSL) have been advised not to expect a maximum annual return in dividend payments for the shares they hold.
According to company chairman Brian Horwood, the company needs to preserve funds to inject into the PNG liquefied natural gas (LNG) project.
Oil Search holds 29% stake in the PNG LNG project.
“There will not be payments in dividend in maximised figures because we want to maintain the cash we have for PNG LNG (project),” he said while responding to a question by a member of the audience on the dividend payments to shareholders during the company’s 79th annual general meeting in Port Moresby last Friday.
The board has approved dividend payments totalling US$0.04 (K0.11) per share for the financial year ending last Dec 31.
“The lower level of dividend payments compared to previous years reflected the fall in profitability last year and the need to make equity contributions to the PNG LNG project.
“Future dividends are expected to remain aligned with half and full year earnings,” he said in his presentation adding that the underwritten dividend reinvestment scheme would continue ensuring that cash was retained to fund the PNG LNG project and other value adding activities.
Meanwhile, Oil Search had US$1.39 billion (K4 billion) in cash at the end of the March quarter and, according to managing director Peter Botten, the money has been invested with highly rated bank counterparts.
Also available from  term revolving facility was US$348 million (K951 million) and US$391 million (K1 billion) drawn down from PNG LNG project finance facility on March 31 (including US$303 million (K828 million) debt drawback relating to past expenditures.
In ending last year’s financial year, Oil Search recorded a strong balance sheet with US$1.3 billion (K4 million) cash, total liquidity of US$1.6 billion (K4 billion) (including line of credit), sufficient for both PNG LNG equity contribution plus funding of Train Three and Four gas exploration and appraisal programme.